Development of the Smart Fortwo began as the Swatch car project before 1993, initiated by Nicolas Hayek in collaboration with Volkswagen. The design focused on a modern microcar with electric or hybrid drive, but VW's hesitation led Hayek to Mercedes.

MCC (Micro Compact Car AG) was founded in Biel in 1994 by Nicolas Hayek as a joint subsidiary of Daimler-Benz and SMH SA (Société Suisse de Microélectronique et d'Horlogerie).

The first generation Smart Fortwo, internally designated as the W450, was launched at the 1998 Paris Motor Show.

The Smart Fortwo cabrio was introduced, expanding the model range beyond the original City-Coupé.

Smart launched the Smart K exclusively for the Japanese market in October. It was designed to meet Japanese kei car regulations by adopting specially developed rear fenders and narrowing the track width and tire dimensions.

The first generation Smart Fortwo received a facelift, including an increase in engine displacement to 698 cc.

The New York Museum of Modern Art (MoMa) added a first-generation ForTwo to its permanent collection, marking the first time a vehicle was included while still in series production.

Smart created the Smart Crossblade, a version of the Smart Fortwo without a roof, doors, or a proper windshield. Only 2,000 units were produced.

The Smart Fortwo was marketed through select Mercedes-Benz dealers in Australia from 2003.

Smart and Brabus introduced their jointly developed version of the Fortwo with the 698cc engine, producing 75 PS (55 kW; 74 hp) of power and 110 Nm of torque. It was available in both coupe and convertible versions.

The smart fortwo was introduced in Canada and sold through Mercedes-Benz dealers. Only the turbo-diesel powerplant was offered for the 450 coupé and 450 convertible models.

The Smart K was discontinued in November.

A convertible with a foldable windshield based on the Fortwo, was presented at IAA Frankfurt.

DaimlerChrysler showcased the Smart brand at the North American International Auto Show in Detroit, featuring the Smart Forfour, Smart Roadster, Smart Fortwo Coupé, and Smart Fortwo Cabrio models.

Field testing of an all-electric version of the Fortwo, the Smart Fortwo electric drive, began in London with 100 units.

Chinese manufacturer Shuanghuan Auto released the Shuanghuan Noble, a car designed similarly to the Fortwo, leading Daimler AG to sue for copyright infringement.

The second generation Smart Fortwo, build series 451, was introduced, featuring a length increase to 2,690 mm (106.1 in) and improved crash performance.

At the Frankfurt Motor Show, Smart debuted the "micro hybrid drive" (MHD) version of the Fortwo, featuring an automated start-stop system.

Smart USA, a division of Penske Auto Group, officially began distributing Smart vehicles in the United States and Puerto Rico.

The Smart Fortwo became available in the United States.

Smart premiered at the 2008 Beijing Auto Show.

The Smart "vending machine" road show had the first stop in Shenyang and began the Fortwo's pre-order period.

Revised transmission software enabled smoother and faster gear changes. The software, available via an ECU upgrade, was also made available for 2008 second generation cars, with a new battery as required.

Smart Canada released ten tenth anniversary edition smart Fortwo cars in February. Each car started life as a Canadian BRABUS model before being converted into tenth anniversary editions by BRABUS in Germany.

Production of the second-generation Smart Fortwo electric drive began in Hambach, France.

A few units of the fortwo Brabus were also offered in Brazil.

The range received a minor interior facelift for the 2011 model year with standard knee airbags, new instrument cluster, more extensive cloth trimming for the top of the instrument panel, circular rather than rectangular outboard dash vents, optional multimedia system with a 6.5" display, and optional surround-sound audio system.

The third-generation Smart electric drive was unveiled at the September 2011 Frankfurt Motor Show.

Smartville underwent a 200 million euro upgrade beginning in mid-2013 for the third generation.

For the 2013 model year, all Fortwos received a minor exterior facelift with revised lower facias, front and rear, and a relocated brand emblem located inside rather than above the front grille.

The Fortwo was voted the Best Microcar for the fifth year in a row by readers of the Chinese edition of Auto, Motor und Sport.

The third generation Fortwo (C453) was launched, having been jointly developed with Renault.

Fortwo production had surpassed 1.7 million units by early 2015.

Smart announced a cabriolet version of the Smart Fortwo at the 2015 Frankfurt Motor Show.

Mercedes-Benz stopped selling the Smart brand in Australia due to declining sales.

The third generation Smart Fortwo Coupe (C453) launched in the United States for the 2016 model year.

Mercedes-Benz decided to discontinue offer of the fortwo in Brazilian market, hence Brazilian customers never had the option of the 453.

The smart fortwo cabrio launched globally.

The fourth generation Smart Fortwo Electric Drive made its debut at the 2016 Paris Motor Show.

The redesigned 2017 Smart Fortwo Cabrio (A453) joined the smart USA lineup.

Smart USA announced the brand would discontinue gasoline vehicle sales after the 2017 model year and focus purely on battery electric vehicles.

The year 2018 marked 10 years of Smart Fortwo sales in the United States, and the brand offered a special tenth anniversary edition specific to the United States market to celebrate.

Electric versions of the smart fortwo would be branded as the smart EQ fortwo. This change was to further align with the upcoming Mercedes EQ brand in which all Mercedes-Benz produced electric vehicles would receive EQ branding.

A facelift model was announced to be available with electric drive beginning in 2020.

Sales were terminated in the U.S. and Canada. The vehicle never met sales goals.